Orange & Gold Blog

HMRC to send a million child benefit change letters

It is expected that a million letters will be issued during November to families affected by next year’s child benefit changes. These letters explain the new High Income Child Benefit Charge that takes effect from 7 January 2013.

The new charge kicks in when a taxpayer’s OR their partner’s income is more than £50,000 in a tax year and if they, or their partner, receives child benefit. It does not look at joint income, but each taxpayer’s income alone. Income includes salary, dividends, earnings from rental properties, etc.

For those with income of more than £60,000, the tax charge is 100% of the amount of child benefit. If income is between £50,000 and £60,000, the charge is gradually increased to 100% of the child benefit.

Those affected will need to decide whether to keep receiving child benefit and pay the tax charge through self-assessment, or to stop receiving child benefit and not pay the new charge. If their income is less than £60,000, the tax charge will always be less than the amount of child benefit, and they could lose money to which they are entitled if they stop receiving child benefit.

Orange & Gold

We are a team of accountants and client service professionals who provide genuinely personal service to help freelance consultants in the UK manage their income and taxes. Our clients are mainly limited company contractors, but we also have an umbrella payroll service and a management consultancy for more unusual scenarios.